BMW’s M GmbH is responsible for some of the most satisfying cars ever to roam the planet. For the past 25 years, its creations have become ever more powerful and faster—and, accordingly, more expensive. The entry-level M car, the 3700-pound M3 sedan, now comes in at $56,275 and is powered by a 4.0-liter V-8. That’s a lot of money and engine, and although the current M3 is a supremely fast and rewarding steed, it does not feel as light and nimble as its E30 forebear.

New M GmbH chief Kay Segler has promised to address concerns about weight, price, and size of his division’s current lineup, and he is poised to deliver. On the occasion of the M3’s 25th-anniversary celebration at Spain’s Ascari racetrack, Segler lifted the covers off an upcoming M version of the 1-series coupe. Even in prototype form, it’s almost everything we had hoped for.

Despite its light camouflage, the 1-series M coupe—intentionally named to recall past Z3- and Z4-based M cars—is easy to identify from the outside. The 1-series’ body and track have been widened significantly front and rear, there is a unique front bumper, the trunklid gets a spoiler lip, and the exhaust flows through quadruple tailpipes. The M-specific interior—it was not installed in this prototype—will feature sport seats, unique trim, and special instrumentation.

The N54’s Last Stand?

Although the 300-hp 135i has switched from the twin-turbo N54 to the single-turbo N55 engine, the 1-series M coupe—like other BMWs recently unveiled with high-powered inline-sixes—gets a more powerful version of the N54, upgraded to about 335 hp. It’s mated to a slick six-speed manual gearbox—no automatic or dual-clutch transmission will be offered.

Segler’s troops still might shave a few pounds off the 135i’s total of almost 3400, but there is no budget for expensive lightweight materials. Zero-to-60 times should be in the mid-four-second range, and top speed will be governed to 155 mph. As it does with other M cars, BMW might offer the option to raise the limit, but we doubt it would go much beyond 170.

We weren’t allowed to slip behind the wheel ourselves, but we were treated to a fast lap in the passenger seat as M chief engineer Albert Biermann whipped the coupe through the corners and down the straights of the Ascari racetrack. Getting the small M into a slight drift seemed as effortless as recovery, and the kick provided by the uprated engine represents a major step above that of the 135i. Turbo lag is slight and doesn’t significantly detract from the experience. Compared with the M3, you sit lower to the ground, the cabin is more compact, and thus you get a much better sense of speed than in the bigger car.

If we have one criticism, it would be the overly civilized conduct of this compact M. The silky straight-six is pleasing, but the turbos keep the volume down. There is none of the dramatic roar, bellow, and crackle of other M models. This exhaust system needs to be put on steroids. If M won’t do that before the car reaches production, the aftermarket will.

A Super Car, but Not a Supercar

The 1-series M coupe began life code-named Pyrat, and BMW thankfully refrained from calling it the M1. That nameplate, after all, is perpetually connected to the Giugiaro-styled and Lamborghini-developed supercar that BMW launched in the late 1970s. Perhaps one day the company will reenter that segment, and if only for that purpose, the nameplate must be left alone.

Meanwhile, look for the 1-series M coupe at your BMW dealership in the second quarter of 2011. We anticipate a price of about $45,000, which seems a bit steep for a suspension, some interior upgrades, and a chippable 35 more horsepower, but for now, it is the closest we’ll come to the original M3. And it will still be loads of fun.